Clintons' populist image hit hard by Whitewater

WASHINGTON -- In 1992, Bill Clinton won the White House by presenting himself as the champion of the "forgotten" middle class against an incumbent president who seemed out of touch with the lives of ordinary people.

Perhaps the most damaging result of the Whitewater investigation so far is what it has done to the image Mr. Clinton and his wife, Hillary, tried to project in that campaign: two people who cared little about money and were committed to public service, in contrast to the Republicans who preceded them.

"We were like a lot of people. We invested money, and we lost," Mr. Clinton continued to insist last week. "It was a perfectly honorable thing to do. And it was a perfectly legal thing to do."

But as Whitewater grinds on, a new portrait seems to be emerging. Instead of being just "middle-class folks" -- the president's phrase -- he and especially Mrs. Clinton are increasingly being seen as a couple who acquired wealth and realized big returns from passive investments requiring little of their own money. By almost any standard, the Clintons could not be classified as middle class.

Mrs. Clinton engaged in a hands-on way in a series of deals that now seem eerily similar to the "get-it-while-you-can" schemes Mr. Clinton railed against when he ran for president -- and laid at the feet of Republicans.

But there is more at stake for this administration than being accused of saying one thing while doing another. What really motivates Bill and Hillary Clinton? They always insisted it wasn't money.

"Let me tell you what my wife and I spent the '80s doing," the president said at his news conference last week. "I was the lowest-paid governor of any state in the country. . . . Every year I was governor, my wife worked in a law firm that had always done business with the state. She . . . gave up her portion of partnership income that otherwise came to the firm, and, instead, every year gave an enormous percentage of her time to public service work . . . giving up a lot of income."

At best, this appears to be a selective recitation of what the records show:

* Salary and expenses: Mr. Clinton's salary as attorney general and later governor of Arkansas began at $23,000 and rose to $35,000 a year. But in at least two years, -- 1989 and 1990 -- according to tax returns previously released by Mr. Clinton, he earned $54,000 from the state because he tapped $19,000 from a "public relations" fund appropriated at the discretion of the governor -- himself.

For eight of the 10 years of the 1980s, the Clintons received free housing, some free food and almost entirely free transportation by the state. Arkansas ranked 49th in per capita income in 1980; and in the years that followed, Mrs. Clinton's salary and bonuses at the Rose Law Firm rose steadily to her 1992 share of $203,172. By the end of the decade, Mrs. Clinton was also earning $32,400 annually in speaking fees and directorships from her appearance on corporate boards.

In short, the Clintons earned well above a six-figure income in one of the nation's poorest states, with almost none of the overhead living expenses of ordinary Americans for nearly 15 consecutive years.

"In Arkansas, less than one-half of 1 percent of taxpayers had adjusted gross income of $200,000 or more in the early 1990s," said Geoffrey Carliner, executive director of the National Bureau of Economic Research in Cambridge, Mass.

"In the U.S. as a whole it's well under 1 percent. The Clintons were well into the top 1 percent of families in America in 1992. That's not the middle class, whether in Washington or Arkansas. They were very well-off."

* Investments. The most famous is Whitewater Development Corp., the couple's ill-fated partnership with James and Susan McDougal.

Mr. Clinton this week sharply scaled down his earlier claim that he lost $68,900 in the venture. More damaging than the exact dollar amounts, however, is the assertion by Mr. McDougal -- not directly disputed by the Clintons -- that they stood to split any profits from the deal while putting up little of their own money.

Moreover, respected Iowa Republican Rep. Jim Leach last week presented the strongest evidence yet that money from Mr. McDougal's now-defunct S&L was funneled into Whitewater in what he characterized as a textbook example of 1980s-style excess.

A second controversial Clinton investment came in 1979 when Mrs. Clinton, again apparently without putting up much money, speculated in the commodities market under the guidance of James Blair, a lawyer who represented Tyson Food Inc., a huge Arkansas-based company subject to regulation by the state and federal governments.

The tax records released Friday at the White House show that the Clintons essentially doubled their income in one year by Mrs. Clinton and Mr. Blair's success in trading cattle futures. In 1978, the Clintons had an adjusted gross income of $85,214. In 1979, they reported an adjusted gross income of $158,495.